Archive for the ‘taxes’ Category

American Fortune 500 corporations are likely saving about $550 billion by holding nearly $2 trillion of “permanently reinvested” profits offshore. Twenty-eight of these corporations reveal that they have paid an income tax rate of 10 percent or less to the governments of the countries where these profits are officially held, indicating that most of these profits are likely in offshore tax havens.

While congressional hearings over the past few years have focused attention on the tax avoidance strategies of technology corporations like Apple and Microsoft, this report shows that a diverse array of companies are using offshore tax havens, including U.S. Steel, the pharmaceutical giant Eli Lilly, the apparel manufacturer Nike, the supermarket chain Safeway, the financial firm American Express, and banking giants Bank of America and Wells Fargo.
…
These 28 companies are not alone in shifting their profits to low-tax havens—they’re only alone in disclosing it. A total of 301 Fortune 500 corporations have disclosed, in their most recent financial reports, holding some of their income as “permanently reinvested” offshore profits. At the end of 2013, these permanently reinvested earnings totaled a whopping $1.95 trillion.

The only way to have both balanced budgets and low taxes on the middle class is to tax deadbeat corporations. Everyone else, especially those many corporations which do pay taxes (notably, corporations whose operations are all in the US), should be in favor of this.

Share this:

Like this:

Krugman linked an executive summary of a paper by Fieldhouse that says that the upper marginal rate needs to be much higher. Krugman pegs it at 73%-80%, with the 73% being Diamond and Saez, but there’s some uncertainty about where the maximum occurs, so it could be a bit lower and, besides, those figures include federal, state, and local taxes. So the upper marginal federal rate is somewhere around 69% according to Diamond and Saez.

The main point, which shouldn’t get lost in the small uncertainty in where the optimum upper level is, is that it is well above the current upper marginal rate. If we have a deficit problem (or, if you look at our infrastructure, schools, justice system, etc. an underspending problem), then there is a pretty simple solution.

For anyone who knows the history of the religious right, the possible revocation of tax-exempt status for claimed religious belief is a potent flashpoint. In his book, Thy Kingdom Come: An Evangelical’s Lament, religion historian Randall Balmer argues that contrary to conventional wisdom, which Balmar calls the “abortion myth”, evangelical voters were not propelled to political activism by the supreme court’s 1973 decision in Roe v Wade.

Instead, the issue that mobilized these voters was the IRS’s 1975 revocation of the tax-exempt status of the segregationist Bob Jones University. Rightwing religious architect Paul Weyrich told Balmer that it was “the federal government’s moves against Christian schools” that actually “enraged the Christian community”.

Give us our goodies or we’ll take over the government. [More at Daily Kos]

This is relevant because the right’s latest hissy fit comes from our…eh…friend…Cong. Aaron Schock, who is claiming the IRS targeted antabortion groups over their prayers. Posner notes:

Questioning anti-abortion groups – even the content of their prayers – could very likely have been aimed at determining whether these groups engaged in activities outside abortion clinics that ran afoul of the law. Because of the history of abortion clinic violence by those claiming a religious imperative, the IRS could have been attempting to determine whether the groups’ activities were in violation of the Freedom of Access to Clinic Entrances Act (Face), a 1994 law which prohibits the use of force, the threat of force, or physical obstruction to injure, intimidate or interfere with someone’s access to or provision of reproductive health services.

The coolest story is this one, from Reuters:

Atheists should be seen as good people if they do good, Pope Francis has said in his latest urging that people of all religions, and none, work together.

The leader of the world’s 1.2 billion Roman Catholics made his comments in the homily of his morning mass at his residence, a daily event at which he speaks without prepared comments.

He told the story of a Catholic who asked a priest if even atheists had been redeemed by Jesus.

“Even them, everyone,” the pope answered, according to Vatican Radio. “We all have the duty to do good,” he said.

I’m glad to hear this from a Pope. After all, who is doing what Jesus wants? A person who denies God but feeds the poor, or someone who spends all their time in church and never does a good deed?

Speaking of people who spend their time in church but don’t do good deeds, I have to wonder what God is thinking about this fellow (from Kim Wilsher, The Guardian):

Dominique Venner, 78, a far-right essayist and historian took his life in front of the altar at Notre Dame on Tuesday after writing a blog condemning France’s recently passed law allowing same-sex marriage and adoption.

The cathedral was evacuated after Venner walked into the building with tourists at about 4pm, placed a letter on the altar, then shot himself through the mouth. Hundreds of visitors were evacuated.

Afterwards, Le Pen, head of the far-right Front National, tweeted her “respect” for Venner and said his death was an “eminently political” gesture.

Before killing himself Venner sent a letter to friends saying he was in good health in body and in mind, was filled with love for his wife and children, and loved life.

He had written: “I expect nothing more from life except the continuation of my race and my spirit. However, at this, in the evening of that life and in the face of immense dangers for my French and European heritage, I feel the need to act, while I still have the force. I believe it is necessary to sacrifice myself to break the lethargy that oppresses us. I offer what remains of my life in an act of protest.”

Venner said he chose Notre-Dame as a “symbolic place … which recalls our immortal origins”; the reason for his suicide would be evident from his recent writings.

The historian had described France’s same-sex marriage bill, known as the “marriage for all” law, as vile. It passed into the statute books on Saturday after months of furious and often ferocious debate, protest and violence.

Venner was a former member of the Secret Army Organisation, which opposed Algerian independence in the early 1960s and waged a terror campaign against Charles de Gaulle’s government.

I can imagine an awkward conversation, beginning with “Dominique, what was it about ‘Thou shalt not kill” that was so hard to understand?”
_________
Added: An important primer on Opus Dei in Latin America I wanted to link, which describes the interference of Opus Dei, presumably in the form of Cardinal Maradiaga, in preventing emergency contraception.

The Internal Revenue Service apologized Friday for subjecting Tea Party groups to additional scrutiny during the 2012 election, but denied any political motive.

Lois Lerner, who heads the IRS unit that oversees tax-exempt groups, said organizations that included the words “tea party” or “patriot” in their applications for tax-exempt status were singled out for additional reviews. Her remarks came at an American Bar Association gathering.

Lerner said the practice, initiated by low-level workers in Cincinnati, was wrong.

We have a situation in this country where blatantly political organizations get tax-exempt status. The American Crossroads spin-off Crossroads GPS, funded by billionaires like Bob Perry, gets 501(c)4 status, meaning that their fund-raising doesn’t get taxed (most donations are not tax exempt, however). If they were called what they are, lobbying/PR organizations, they would have to pay taxes. So they are being subsidized.

If the practice was “initiated by low-level workers in Cincinnati,” then presumably it had very minor effects. I’d like to see just how much harassment left-wing groups have received, since historically we know that it is considerable. Like, say, the NAACP. Or All Saints Episcopal. And don’t let’s get started on Nixon.

So, IRS, leave the d–n Tea Party alone… to the same extent that you leave their ideological opposites alone.

CNBC is flogging this story. Expect it to be everywhere soon.
_____________
Predictably, Kossacks swallow the bait without reflecting very long or hard….

When are Democrats/liberals going to start thinking before they start apologizing?

Millions of internal records have leaked from Britain’s offshore financial industry, exposing for the first time the identities of thousands of holders of anonymous wealth from around the world, from presidents to plutocrats, the daughter of a notorious dictator and a British millionaire accused of concealing assets from his ex-wife.

The leak of 2m emails and other documents, mainly from the offshore haven of the British Virgin Islands (BVI), has the potential to cause a seismic shock worldwide to the booming offshore trade, with a former chief economist at McKinsey estimating that wealthy individuals may have as much as $32tn (£21tn) stashed in overseas havens.

I’m really getting into FFFFFF territory when I see demands for cuts to Social Security, Medicare, and Medicaid at a time when we know that the ultra-wealthy have seceded from their responsibilities as citizens.

Like this:

Via Ritholtz, a synopsis by ataxingmatter of the social welfare vs. corporate welfare components of the fiscal cliff deal and of the tax code. It’s fascinating how so-called conservatives demand that we give money to companies, something that they themselves call “socialism.” All of Social Security and most of Medicare are paid for with taxes, while things like the R&D tax credit are not.

The tax subsidies to 27 companies for 2008-11 alone were larger than what is needed for Hurricane Sandy relief, so I guess you could say those companies are worse than a major natural disaster for this country. Depreciation, depletion, deferral and the R&D tax credit (which is supposed to help small hi-tech businesses) account for most of the tax dodging.

Now, that’s pretty easy. If the bank forecloses on your house, your debt is extinguished. This is not really the kind of debt decline we’d like to see. But actually the federal deficit has been falling since the end of the recession.

So, yes, at 8.6% of GDP as of 2011, the deficit is too high. As more people go back to work, the payroll tax holiday goes away, and the wealthy are cajoled into paying a little more in taxes, the deficit should drop swiftly… it’s already down from the 10.1% of GDP achieved by Dubya Bush in fiscal year 2009 (ending in October 2009, and therefore preceding almost all of the stimulus spending, contrary to what James “Dow 36000″ Glassman thinks, only 22%–$33B– had been spent, most in the form of a special payment to Social Security recipients).

The magic number is about 3% of GDP. As long as the deficit remains under that limit, the debt burden will not rise, since it will be within population + productivity growth. Notice which presidents achieved that level of deficit or better.

Like this:

A huge fraud, $230M, was committed in Russia against the Hermitage group. Jerome Taylor, The Independent:

What [auditor Sergei] Magnitsky uncovered was as follows. In late 2007 Russian police raided the offices of Hermitage Capital Management, a multi-billion pound investment fund set up by the British businessman Bill Browder, ostensibly looking for information on an investor. During that raid company seals and corporate certificates were taken into evidence. Over the following months those seals were used, with the complicity of corrupt court and tax officials, to transfer ownership of a Hermitage subsidiary and apply for a tax rebate. On December 24th 2007, tax officials signed off on a 5.4 billion rouble ($230m) rebate. The money was wired to Universal Savings Bank, a little known bank that was quickly liquidated following the transfer.

The Russian police admit that the crime took place but they have pinned the blame on a retired sawmill worker, a burglar and two others who died suddenly in the immediate months following the fraud.
…
Russia’s unwillingness to prosecute the real perpetrators of the scam has not stopped Mr Browder from using his own tenacity, resources and a team of disaffected Russian business experts to uncover new details through their own investigations. The results are published regularly on the website RussianUntouchables.com, a prominent gathering point for Russians who are angered by corruption in their homeland.

Today, Jerome Taylor and Cahal Milmo report that another witness has died suddenly:

A Russian supergrass who was helping Swiss prosecutors uncover a multi-million pound money laundering scheme used by corrupt Russian officials has died in mysterious circumstances outside his Surrey home, The Independent can reveal.

Alexander Perepilichnyy, a wealthy businessman who sought sanctuary in Britain three years ago after falling out with a powerful crime syndicate, collapsed outside his mansion on a luxury private estate on the outskirts of Weybridge. He was 44-years-old and was in seemingly good health.

The Independent has learned that Mr Perepilichnyy was a key witness against the “Klyuev Group”, an opaque network of corrupt Russian officials and underworld figures implicated in a series of multi-million pound tax frauds and the death in custody of the whistle-blowing Moscow lawyer Sergei Magnitsky. He is the fourth person to be linked to the scandal who has died suddenly.

One of the companies involved in the scandal was set up by Geoffrey Taylor/GT Group (the original article, from Barrons, is here, but most of it is behind a paywall):

The business magazine Barron’s reported that late last month documents emerged out of London that linked a shell company called Bristoll Export, registered in New Zealand by GT Group, to a scandal that some commentators claim has the potential to be Russia’s Watergate.

It centres on Russia’s largest tax fraud, which occurred on Christmas Eve, 2007, when Moscow tax officials approved a same-day refund of $US230 million to a gang masquerading as representatives of Hermitage Capital, once the largest portfolio investor in Russia.

The money was funnelled through accounts at Citibank, JPMorgan Chase and Credit Suisse via a series of shell companies, one of which was allegedly Bristoll Export.

One of our posters, X, has drawn attention to a post over on by Richard Smith on Naked Capitalism that discusses how the GT Group is involved in half of the shell companies unearthed by the Guardian in its expose on offshore havens, which I mentioned a couple of days ago (here and here).

My question is what does it mean? Creating these shell companies is legal. If I suddenly had a brainstorm and wanted to incorporate in a hurry, I might use one. They are just tools. Knocking out a busy beaver like Geoff Taylor might inconvenience the crime figures, arms smugglers, and former Massachusetts governors/presidential candidates who use these tools, but someone else would take their place very quickly. What would seriously inconvenience these people would be a requirement that companies actually follow the rules of incorporation, like for example, having one person serve as the head of no more than, say, half a dozen companies, that the companies have annual meetings and file annual reports. Even so, there are a lot of legitimate businesses that might scream about that (don’t ask me to explain, but there are small businessmen who have complex business structures to protect themselves from liability).

This is one of those situations which excites the conspiratorially-minded, since it’s very likely that the owners of these shell companies include arms smugglers, Russian mafia, porn site operators, offshore poker sites, drug cartels, and the CIA. But that’s like saying that burglars and locksmiths both have lockpicks.

Share this:

Like this:

Following up on a previous post regarding an effort to clamp down on tax evasion….

The presidential campaign might have failed to address poverty and global warming. But it did bring forward one important issue: the use of offshore shell companies to evade taxes and commit other crimes. James Ball of The Guardian has the interesting tale of a woman who is the titular head of 1200 companies:

[Mrs.] Petre-Mears does not appear to need to know much about the people for whom she passes resolutions, allots shares and helps set up bank accounts. All she has to do is sign her name.

Those names appear on activities ranging from Russian luxury property purchases, to porn and casino sites. Sometimes, such nominees even act as shareholders as well as directors.

Secret filming by the BBC as part of a joint investigation with the Guardian newspaper and the Washington-based International Consortium of Investigative Journalists identified a number of corporate service providers – firms that specialise in setting up companies both in the UK and abroad – willing to facilitate tax evasion and turn a blind eye to criminal activity.

Maybe US media will discover a story someday, too. There’s enough tax evasion to substantially close the deficit without throwing a single granny into the snow.

Radical plans to force the UK’s tax havens to reveal the names behind hidden companies, account holders and trusts have been drawn up by the Treasury.
…
A leaked document reveals that the UK plans to impose its own version of the US Foreign Account Tax Compliance Act (Fatca) on the crown dependencies of Jersey, Guernsey and the Isle of Man, as well as its overseas territories, such as the Cayman Islands.

Fatca, which will come into force in the middle of next year, requires foreign banks to report American account holders to the US Inland Revenue Service. The draft UK equivalent, seen by the magazine International Tax Review, will require British tax havens to make similar disclosures about UK account holders to UK tax authorities.

So Romney loses an election, loses his tax havens. I bet the latter hurts a lot worse.